When it comes to short term trading, a strategy in which I hold positions for no more than a couple weeks, I rely heavily on technical analysis.
I often look to find value in equities that are trading near support, show signs of future, positive price momentum, and offer stable or strong volume, and up-turning stochastic and MACD indicators. Stocks with strong company fundamentals, though not a necessity for my short term trades, are certainly favored.
Below are four equities that are trading near relative support and show potential, positive price momentum:
1. MGM Resorts International (NYSE:MGM) is trading just above strong support at $9.50, a level the stock has not been below for more than a week since August, 2009. Fundamentally the company is strong and produces very good returns with its 50.31% return on equity (ROE). The company also appears somewhat undervalued as it is currently trading for less than book with a 0.82 price to book (P/B) ratio.
Stochastic and MACD on both daily and weekly charts are beginning to turn upward, adding evidence of a potential bounce off of support at $9.50.
Below is a three month look at recent price movement on daily charts. As mentioned, price, stochastic, and MACD appear to be consolidating near the $9.50 support level and look to be ready to begin a short term trend reversal to the upside.
2. Hertz Global Holdings, Inc. (NYSE:HTZ) fell hard in May but consolidated at the $12.00 price level and has since used this level as support. The stock is now trading just above this level, potentially offering a good entry point. Hertz Global Holdings, Inc. doesn't appear significantly undervalued like MGM Resorts International above but does show a low price to sales (P/S) ratio of 0.61 and produces decent returns, 12.66% return on equity (ROE) and 4.19% return on assets (ROA).
Stochastic and MACD on both daily and weekly charts also look to be leveling off and ready to turn upward. The stock also appears to be, once again, consolidating at the $12.00 support level mentioned above.
Below is a three month look at recent price movement on daily charts. As mentioned, price, stochastic, and MACD appear to be consolidating near support and show signs of a potential bounce off of this $12.00 level.
3. Pier 1 Imports, Inc. (NYSE:PIR) is trading in a similar price pattern as Hertz Global Holdings, Inc. The stock broke above resistance around the $15.75 price level in late January this year and has since used this price as support. The stock is, as it has done many times since January, trading just above support at $15.75, potentially offering a good entry point.
Though not necessarily undervalued, fundamentally, the company is strong and, with a 38.67% return on equity (ROE) and a 13.29% return on assets (ROA), produces good returns.
Like the stock's price in recent sessions, stochastic and MACD on daily charts are beginning to consolidate and look to be turning upward.
Below is a three month, daily chart look at this consolidation near the $15.75 support level:
4. iShares Silver Trust (NYSEARCA:SLV), like silver, the commodity it tracks, has consolidated around support and is now trading just above this level. iShares Silver Trust has used the $26.00 price level as strong support for over a year and hasn't been below this price for more than a week since it broke above this level in November, 2009. As this is an exchange traded fund (ETF), SLV has no significant fundamentals to offer in our analysis.
As silver has been a bit unpredictable this year, stochastic and MACD for iShares Silver Trust also appear inconsistent and do not offer a clear picture of future price movement. Support, however, as mentioned above, looks very strong.
Below is a look at the ETF's price movement around the strong, $26.00 support level, a level I would be very surprised to see SLV fall below anytime soon.